We're right herewith you

We're right herewith you

We have the answers... and we're happy to share

We're in this together

Bring your career to life

It all starts with you

New York Life is dedicated to serving professional advisors

What do you wantto do?

We're hereto help

Bring your career to life

We have the answers... and we're happy to share

Bring your career to life

Printed from: www.UmpquaWealth.com

SRI Investing: Not Just for Stocks

Sustainable, responsible, and impact (SRI) investing — also called socially responsible investing — has been around for a long time, but growing interest has moved it into the mainstream. U.S. SRI assets reached $12 trillion in 2018, 38% more than in 2016. SRI investments now account for about one-fourth of all professionally managed U.S. assets.1

Surveys suggest that many people want their investment dollars to have a positive impact on society.2 Of course, personal values are subjective, and investors may have very different beliefs and priorities.

But there is also a wider recognition that some harmful business practices can affect a corporation’s bottom line and its longer-term prospects. In some instances, good corporate citizenship may boost a company’s public image and help create value, whereas shortsighted actions taken to cut costs could cause more expensive damage in the future. Numerous studies have shown that SRI stocks and mutual funds as a group tend to perform similarly to the broader stock market over the long term, and in some cases may outperform non-SRI investments.3

ESG Factors

SRI strategies typically incorporate environmental, social, and corporate governance (ESG) factors to analyze and construct investment portfolios. ESG data for publicly traded companies is often provided along with other data by investment research and analysis services. Money managers who use SRI strategies integrate ESG factors with traditional financial analysis.

Some examples of ESG issues include environmental practices, employee relations, human rights, and product safety and utility. For example, an SRI approach might include companies with positive ESG ratings, while screening out companies that raise red flags by creating a high level of carbon emissions, engaging in questionable employment practices, investing in countries with poor human rights records, or profiting from certain products or services (e.g., tobacco, alcohol, gambling).

Individual Impact Bonds

SRI strategies have traditionally focused on stocks and stock funds. Out of almost 1,900 ESG funds tracked by Bloomberg, only 15% invest in fixed income, and these account for just 3% of total assets in ESG funds.4

The limited choices in ESG fixed-income funds can make it more difficult for conservative investors, including retirees, to pursue SRI goals while maintaining principal and generating income. A growing category of individual impact bonds may help address these concerns while providing a direct and transparent way to support activities that are important to the investor.

Individual impact bonds are issued by a variety of entities, such as nonprofit organizations, international development organizations, and community development financial institutions that fund projects in economically disadvantaged communities. As with all individual bonds, the holder of an individual impact bond will receive principal and interest if the bond is held to maturity (unless the bond issuer defaults), providing a level of certainty that cannot be obtained through holding shares of bond funds.

Diversification and Risk

Many SRI mutual funds are broad based and diversified. Some are actively managed, and others track a particular index with its own universe of SRI stocks. Specialty funds, however, may focus on a narrower theme such as clean energy; they can be more volatile and carry additional risks that may not be suitable for all investors. Different SRI funds may focus on different ESG criteria, and there is no guarantee that an SRI fund will achieve its objectives. Diversification is a method used to help manage investment risk; it does not guarantee a profit or protect against investment loss.

As with all investments, the return and principal value of SRI stocks and investment funds fluctuate with changes in market conditions. Shares, when sold, may be worth more or less than their original cost. Bond funds are subject to the same inflation, interest rate, and credit risks associated with their underlying bonds. As interest rates rise, bond prices typically fall, which can adversely affect a bond fund’s performance.

Investment funds are sold by prospectus. Please consider the investment objectives, risks, charges, and expenses carefully before investing. The prospectus, which contains this and other information about the investment company, can be obtained from your financial professional. Be sure to read the prospectus carefully before deciding whether to invest.

Jason Harman is an agent licensed to sell insurance through New York Life Insurance Company and may be licensed with various other independent unaffiliated insurance companies in the state of Oregon. No insurance business may be conducted outside this state referenced.

Jason Harman is a Registered Representative of and offers securities products & services through NYLIFE Securities LLC, Member FINRA/SIPC, a registered broker-dealer and licensed insurance agency 500 Liberty Street SE, Suite 500, Salem, OR 97401. In this regard, this communication is strictly intended for individuals residing in the state of Oregon. No offers may be made or accepted from any resident outside the specific state referenced.

Jason Harman is licensed to offer mutual funds and variable products. Market Watch information is provided for informational purposes and is not considered an offering of securities.

Umpqua Wealth is not owned or operated by NYLIFE Securities LLC, or its affiliates.